Groupon is the butt of a lot of jokes within the tech startup crowd, especially after their recent IPO in November. Most of these jokes are deserved — they lose tons of money each quarter, their founders have already cashed out, and the future is bleak for Groupon.
Groupon’s initial value proposition was incredibly innovative. They capitalized on one of the most foundational principles of economics: things costs less to businesses in bulk. They built a platform that empowered businesses to pass these savings onto their customers in exchange for viral and rapid marketing.
Of course, they had no business model. But who cares? Neither does Instagram. Neither did Twitter.
No one cares if you have a business model right off the bat – anyone can monetize a couple million users (or so it goes). As you grow, and continue to drive value through innovation, you find new and exciting revenue models to slowly become financially sustainable.
The potential for Groupon was massive. They gained tons of users very quickly, and they were being cloned hundreds of times every week all over the world. With a great business model, international expansion through acquisition would have been easy. The group-buying economics are location-agnostic. There was a massive upside, but it had to be capitalized on.
But here’s the kicker: they stopped.
The lack of innovation as Groupon grew was astounding. No new business model. No new value. No new marketing strategy. Just skyrocketing costs of customer acquisition and a management team who couldn’t care less.
Potential doesn’t matter if it’s never realized. One innovation is never enough. It takes continual innovation on every front to drive sustainability and growth within organizations. The best companies never settle.